Crypto-based prediction market platform Polymarket said it is "aware" of the alleged governance attack on one of its bets, possibly involving the manipulation of its UMA oracle provider.
Between March 24 and 25, a $7 million Polymarket bet, "Ukraine agrees to Trump mineral deal before April?" surged from a mere 9% yes chance to a 100%, sparking controversy and speculation of coordinated manipulation.
The $7 million bet resolved to a "yes" despite Ukraine not yet officially agreeing to U.S. President Donald Trump's deal aiming to gain access to Ukraine's critical mineral resources.
Multiple Polymarket users alleged on social media platforms X and Reddit that a "UMA whale" — a large holder of Polymarket's vote-determining UMA tokens — cast a significant number of votes to yield a resolution in their favor.
"You must stop betting on Polymarket," wrote X user @Web3Marmot. "The event outcomes are determined by a group of influential users who secure positions and then vote in their favor, regardless of the actual results."
In response, Polymarket posted on its Discord server, admitting that the market resolved its issues against expectations. However, Polymarket said it will not issue refunds to bettors as it "wasn't a market failure."
"This is an unprecedented situation, and we have been in war rooms all day internally and with the UMA team to make sure this won't happen again," a Polymarket team member said on its Discord channel on Wednesday.
UMA, or Universal Market Access, is an optimistic oracle that Polymarket uses to determine the outcomes of prediction markets.
Polymarket allows anyone to post a resolution for a bet by staking a $750 bond in USDC.e, which can be challenged. When the market resolutions are contested, the oracle system enables UMA token holders to participate in a decentralized vote to determine the final result.
In the case of the Ukraine mineral deal bet, @Web3Marmot claimed that one person voted from three different accounts using 5 million UMA tokens, 25% of the total votes, to maintain the distorted market result.
"Polymarket is supposed to be a decentralized truth machine, but now an anon whale can vote anyway to manipulate the result," another user going by @0xcoconutt wrote. "This is dangerous and a terrible model that should be modified."
Polymarket has sought community feedback on its Discord channel regarding potential measures to prevent future platform exploits without outlining specific actions it would take. It said it would announce more details and develop solutions for more transparent rules.
While Polymarket claims this exploit is unprecedented, some online community members argued that there have been manipulation incidents.
"This is not the first case, and it is certainly not an isolated incident," Reddit user iamzheone wrote. "There have been several cases on the platform where markets with smaller volumes were manipulated, but this particular case was the largest."
Last year, Polymarket overturned the UMA resolution for a market betting on whether Barron Trump was involved in Solana-based DJT memecoin. Despite UMA resolving the market to 'No,' Polymarket overturned the result, leading to speculation about undue influence from large UMA token holders.
The U.S. Commodity Futures Trading Commission previously said in its legal case against Kalshi that unregulated prediction markets, including Polymarket, is prone to manipulation.
"It’s important to understand that in political markets, where bets might relate to future deals or even international relations, such manipulations undermine trust and render the platform useless for honest users," the Reddit user said.
The Block has reached out to Polymarket for further comments on the matter.
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